If the market is so hot, why did 39 houses get reduced today?

by John Rice

Simple.  The market is hot for only the best listings.  While the market shifts a little here and there with time, there are some simple truths that always remain.  One is that the best houses will always sell faster regardless of the market.  During the bad market, I always said that if there are only two houses for sale and only one buyer, the buyer will pick the best one.  Now that the market is better, maybe I should say if there are only 200 houses in a price range, the 100 buyers out there will pick the top 100?

My friend Shaun and I were talking last week.  We were wondering how many buyers there really are right now clamouring for the same houses.  He recently blogged about this too, but from a standpoint of accurate list pricing.  That is also one of those truths that is constant regardless of the market….the houses that are priced accurately will also always be the ones to sell more quickly and for closer to the asking price.

So, what does this mean to a buyer?  Well, it means not all new listings will have the perceived competition from other buyers.  Buyers today are so afraid of losing a house in multiple offers that many default to offering list price.  That is great if the house merits that, but not all of them do.  Like, you would have felt pretty stupid rushing in with a full price offer for one of those 39 houses that were just reduced, right?  Those houses obviously were not worth bending over backwards in hopes that the seller would accept your offer.

So how can you tell the difference between a new listing that you better rush to see and one that will end up being reduced down the road?  I look at several factors:  Price, condition, neighborhood, school district, etc.  If all those are good, I look for things that most buyers frown upon, like a steep driveway, odd shaped lot, unlevel lot, laundry room location….just several different things that my experience as a Buyer’s Agent tells me will make the house harder to love.  It is part gut and part science.  The house that is priced right, is in good condition, in a nice neighborhood and easy to say “YES” to is the one you better move on quickly.  The rest?  Don’t worry about those.  I think there are a lot of buyers out there right now who are paying too much for a house because there is a perception that all houses are selling fast.  Not true!

 

Hey Buyer, your new house sucked in 2008 and it still does!

by John Rice

Congrats home buyer who just paid over the asking price for a hot new listing.  I hate to burst your bubble, but did you know that your house and/or your neighborhood were some of the hardest hit during the housing slump?  Sure, the market is hot right now…..but it won’t always be.  Know what that means?

Long story short here, IF your house or neighborhood were not at the top of any buyer’s radar in a bad market, it won’t be during the next buyer’s market.  The neighborhoods buyer’s want haven’t changed.  There are just fewer choices for buyers and people are settling for their second choices.  A shortage of listings means ANY house will sell right now.  It won’t always be like that.  Just ask the people who paid top dollar for your house or in your neighborhood between 2002 and 2005.  They too thought they were lucky to have paid top dollar in a bidding war and were sure they could always sell for more than they paid for it.

So, one thing I stress with my buyers is that they ought to stick with a neighborhood that was still most buyer’s #1 choice in the darkest hours of the housing slump.  That makes them more resilient to any market changes……and even if the market never drops again, it also mean they are in a position to see the most appreciation.  It is all supply and demand.  Make sure you pick something that will always be in high demand….that way supply doesn’t affect you so much!

 

 

 

Selling? Competition from new construction heats up!

by John Rice

I remember my first listing back in 2005.  It was a fairly new house in an area where there were new construction houses going up all over just a few blocks away.  I was worried anybody wanting my listing would prefer to spend similar money to get a similar sized brand new house.  A few months later, the market started to tank and I haven’t had to really worry about competition from new construction since.  Until now.  Don’t know if you’ve noticed, but a heck of a lot of the sales these days are new construction.  New construction is so hot right now that the biggest builder in town has raised their prices three times this year.

New homes are cool.  Everybody likes that fresh new feel in a house.  I’ve found that about 10-15% of buyers are the type who will only pull the trigger on a brand new home.  After many years of working with buyers like this, I have learned to recognize the person who will only buy a new home.  They are the buyers you show many perfectly fine houses to and they don’t like them over very minor issues like paint, or light fixtures, or won’t consider any updating.  It doesn’t take me long any more to suggest to these buyers that we need to check out new construction……and they always find exactly what they wanted!

 

There is also a small percentage of buyers out there that will only consider an existing house.  These are the people who talk about how sterile new neighborhoods are.  I know NOT to suggest new homes to them!

So, let’s say you are a seller right now with new construction close to your house….or even worse, IN your neighborhood.  Know that there are a few people who just won’t consider your house period.  Don’t worry about them.  Your buyer may be somebody who would consider new construction though.  How are you going to compete with shiny and new?

For starters, you’ve got to price it a little less than what a similar sized house would sell for brand new.  A buyer is going to ask themselves why would they pay more for an existing house when they can get brand new?  Ok, I guess they are also asking themselves why would they buy an existing house regardless of price when they can get brand new.  That is where some marketing comes in to play.

About the only thing a brand new house doesn’t have is character.  Yep.  They just don’t feel like a home at first.  6 foot tall trees.  Sod strips that look like a bad skin graft laying in the yard.  Yeah, there is this one downside to new.

What you need to do is make sure buyers notice the things you have that they can’t get with a brand new house.  Got nice landscaping or tall trees?  Let them know in the remarks and with pictures.  Have you gone beyond builder basic with lighting?  Added crown molding?  Have special window treatments?  Screened in a patio?  Fenced the yard?  Added closet storage systems? A theater room?  Firepit?  Show anything like this off.  It will give you an edge.  Why?  Because these are the things most buyers are going to do to a brand new home anyway.  They want to make any house they buy feel like a home.  That is the Achille’s Heel of new construction.

Why I never leave a card when showing a house

by John Rice

I don’t do it.  Did it when I was a newbie.  Quit doing it and never will again.

Back before electronic access to lockboxes, about the only way for a listing agent to know a house got shown was for the buyer’s agent to leave a business card inside the house somewhere, usually the foyer or kitchen counter.  It is one of those practices that should have died long ago but hasn’t.

I don’t like it when agents leave their cards in my listings either.  See, nothing tells a buyer and their agent that a house isn’t selling like seeing a big stack of cards from showings that did not result in a sale.  Heck, sometimes I have seen so many business cards that it looks like some kind of drawing for a free gym membership by the register of a Pizza Hut.  As an agent, it makes me assume the house is overpriced or has some fatal flaw that nobody wants to own.

Besides the fact that I am the only Realtor that doesn’t carry 500 business cards with me everywhere I go, the main reason I never leave one is so no other buyer’s agent knows I was there.  See, I have been in multiple offer situations before and known who I was competing with because I made note of whose card/cards I saw while at the house.   I hit their recent sales activity on the MLS and look for patterns like what percentage of the list price do they normally get their clients to agree to, do most of their clients ask for seller concessions, what type of financing most of their clients do, etc.  Often, I know a little about the agent anyway since I have been around for a while.

BTW, I ordered a box of 1000 cards about 4 years ago and I think I still have about 983 left.  I’ll dust one off if you want one?

How I got my people their house with 2 other offers on it!

by John Rice

Just won my people their favorite house in multiple offers.  There were a total of 3 offers on this house.  Didn’t have to waive any rights nor did I have to go over the asking price.  Just used my head and presented my people as…..wait for it…..people and not just the names at the bottom of the page.

Remember, there is more to getting a seller to want to sell you their house than just the offer price.  There are inspections, closing dates, etc that are variables in the offer.  What I did do here is check the box that allows us to have the house inspected, but we will not ask for repairs.  We will take it or leave it.  But that wasn’t what got us the house.  Sure it helped, but the listing agent told me:

“Congrats! on Contract. Your presentation of the offer was Superb and your
Timing was Right On because two other buyers wanted this place Real Bad.
They identified with your little Note about the family.”

See, as I walked around the house with my client, I noticed the sellers have 4 sons.  My clients have a son too.  A toddler.  They mentioned to me that they plan on having more kids while we were inside the house……Sooooooo, I sent this note with the offer:

“My clients really wants this house for their 18 month old boy, (typed his name here), and his future siblings.   They want to be able to walk to the neighborhood park and like that it will be a good, safe area for him to grow up in.  They also appreciate all the updating your seller has done…….and I really loved their choice in granite!!”

Every bit of that was true, and I am totally sure that the other two agents could have said the exact same thing.  But they didn’t.  And they didn’t get the house for their client.

I totally believe most sellers want to feel good about who is going to live in their house after they leave.  Especially if the sellers are attached to the home and have many good memories there.  It is all about making it easy for a seller to say yes to you.  So much more complex than just going a little over the asking price, which is the default setting for most realtors.

Did you lose your dream house in multiple offers?  Afraid you might lose out when you do find the right one?  Give me a shout….I’ll get it for you!!